Highlights of third quarter review of monetary policy

By IANS,

New Delhi : The Reserve Bank of India Tuesday hiked its short-term lending and borrowing rates by 25 basis points in its third quarter review of monetary policy 2010-11. Following are the highlights of the document:


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— Repo rate raised by 25 basis points to 6.5 percent

— Reverse repo rate hiked by 25 basis points to 5.5 percent

— Cash reserve ratio retained at 6 percent

— Bank Rate retained at 6 percent

— Raises fiscal-end inflation projection to 7 percent from 5.5 percent earlier

— Projection of gross domestic growth retained at 8.5 percent with an upward bias

— Looking beyond 2010-11, GDP growth rate may decline somewhat as agriculture reverts to its trend (assuming a normal monsoon)

— Structural demand-supply mismatches in several non-cereal food items such as pulses, oilseeds, eggs, fish and meat likely to keep food inflation high

— Hike in rates expected to contain the spill-over from rise in food and fuel prices to generalised inflation

— Rate hike moderate enough not to disrupt growth

— Will continue to provide comfort to banks in their liquidity management operations

— Current growth and inflation trends warrant persistence with the anti-inflationary monetary stance

— Next mid-quarter review of monetary policy for 2010-11 will be announced through a press release on March 17

— Monetary policy for 2011-12 will be announced on May 3

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